Well, to President DeGioia, thank
you so much for the gracious introduction, and thanks for bringing
your family -- including JT -- appreciate you. We're going to invite
him over, hang out with the girls. He's a pretty
good-looking young man.

To Mayor Adrian Fenty,
who's doing such a great job in this city, thank you so much for
your attendance. To Representative Donna Edwards, who is
here and represents Maryland's 4th District, thank you.

To Georgetown University
students, it is great to be here. Well, it is good to be
back. I appeared in this room during the campaign and had a
wonderful reception then, and it's wonderful to be back and be with
all of you.

We're going to talk
about the economy today. And I was telling President DeGioia this
may be a slightly longer speech than I usually give, but it's a
slightly bigger topic, and that is how we are going to deal with so
many of our economic challenges.

You know, it's been 12
weeks now since my administration began. And I think that even our
critics would agree that at the very least, we've been busy.
In just under three months, we've responded to an
extraordinary set of economic challenges with extraordinary action
-- action that's been unprecedented both in terms of its scale and
its speed.

And I know that some
have accused us of taking on too much at once. Others believe we
haven't done enough. And many Americans are simply wondering how all
of our different programs and policies fit together in a single,
overarching strategy that will move this economy from recession to
recovery and ultimately to prosperity.

So today, I want to step
back for a moment and explain our strategy as clearly as I can. This
is going to be prose, and not poetry. I want to talk about what
we've done, why we've done it, and what we have left to do. I want
to update you on the progress we've made, but I also want to be
honest about the pitfalls that may still lie ahead.

Most of all, I want
every American to know that each action we take and each policy we
pursue is driven by a larger vision of America's future -- a future
where sustained economic growth creates good jobs and rising
incomes; a future where prosperity is fueled not by excessive debt,
or reckless speculation, or fleeting profits, but is instead built
by skilled, productive workers, by sound investments that will
spread opportunity at home and allow this nation to lead the world
in the technologies and the innovation and discoveries that will
shape the 21st century. That's the America I see. That's the America
that Georgetown is preparing so many of you for. That is the future
that I know that we can have.

Now, to understand how
we get there, we first need to understand how we got here.

Recessions are not
uncommon. Markets and economies naturally ebb and flow, as we've
seen many times in our history. But this recession is different.
This recession was not caused by a normal downturn in the business
cycle. It was caused by a perfect storm of irresponsibility and poor
decision-making that stretched from Wall Street to Washington to
Main Street.

As has been widely
reported, it started in the housing market. During the course of the
decade, the formula for buying a house changed: Instead of saving
their pennies to buy their dream house, many Americans found that
suddenly they could take out loans that by traditional standards
their incomes just could not support. Others were tricked into
signing these subprime loans by lenders who were trying to make a
quick profit. The reason these loans were so readily available was
that Wall Street saw big profits to be made. Investment banks would
buy and package together these questionable mortgages into
securities, arguing that by pooling the mortgages the risks had
somehow been reduced. And credit agencies that are supposed to help
investors determine the soundness of various investments stamped the
securities with their safest rating when they should have been
labeled "Buyer Beware."

No one really knew what
the actual value of these securities were, no one fully understood
what the risks were. But since the housing market was booming and
prices were rising, banks and investors just kept buying and selling
them, always passing off the risk to someone else for a greater
profit without having to take any of the ultimate responsibility.
Banks took on more debt than they could handle.

The government-chartered
companies Fannie Mae and Freddie Mac, whose traditional mandate was
to help support traditional mortgages, decided to get in on the
action by buying and holding billions of dollars of these
securities. AIG, the biggest insurer in the world that had a very
traditional insurance business that was very profitable, decided to
make profits suddenly by selling billions of dollars of complicated
financial instruments that supposedly insured these securities.
Everybody was making record profits -- except the wealth created was
real only on paper. And as the bubble grew, there was almost no
accountability or oversight from anyone in Washington.

Then the housing bubble
burst. Home prices fell. People began to default on their subprime
mortgages. And the value of all those loans and securities
plummeted. Banks and investors couldn't find anyone to buy them.
Greed gave way to fear. Investors pulled their money out of the
market. Large financial institutions that didn't have enough money
on hand to pay off all their obligations collapsed. Other banks held
on tight to their money and simply stopped lending.

Now, this is when the
crisis spread from Wall Street to Main Street. After all, the
ability to get a loan is how you finance the purchase of everything
from a home to a car to, as you all know very well, a college
education. It's how stores stock their shelves, and farms buy
equipment, and businesses make payroll. So when banks stopped
lending money, businesses started laying off workers. When laid-off
workers had less money to spend, businesses were forced to lay off
even more workers. When people couldn't get a car loan, a bad
situation at the auto companies became even worse. When people
couldn't get home loans, the crisis in the housing market only
deepened. Because the infected securities were being traded
worldwide and other nations also had weak regulations, this
recession soon became global. And when other nations can't afford to
buy our goods, it slows our economy even further.

So this is the
situation, the downward spiral that we confronted on the day that we
took office. So our most urgent task has been to clear away the
wreckage, repair the immediate damage to the economy, and do
everything we can to prevent a larger collapse. And since the
problems we face are all working off each other to feed a vicious
economic downturn, we've had no choice but to attack all fronts of
our economic crisis simultaneously.

The first step was to
fight a severe shortage of demand in the economy. So the Federal
Reserve did this by dramatically lowering interest rates last year
in order to boost investment. My administration and Congress boosted
demand by passing the largest recovery plan in our nation's history.
It's a plan that's already in the process of saving or creating 3.5
million jobs over the next two years. It's putting money directly
into people's pockets with a tax cut for 95 percent of working
families that's now showing up in paychecks across America. And to
cushion the blow of this recession, we also provided extended
unemployment benefits and continued health care coverage to
Americans who've lost their jobs through no fault of their own.

Now, you will recall
that some argued this recovery plan is a case of irresponsible
government spending, that it's somehow to blame for our long-term
deficit projections, and that the federal government should be
cutting instead of increasing spending right now. So I want to
tackle this argument head on.

To begin with,
economists on both the left and the right agree that the last thing
a government should do in the middle of a recession is to cut back
on spending. You see, when this recession began, many families sat
around the kitchen table and tried to figure out where they could
cut back. And so have many businesses. And this is a completely
reasonable and understandable reaction. But if everybody -- if
everybody -- if every family in America, if every business in
America cuts back all at once, then no one is spending any money,
which means there are no customers, which means there are more
layoffs, which means the economy gets even worse. That's why the
government has to step in and temporarily boost spending in order to
stimulate demand. That's exactly what we're doing right now.

Second, I absolutely
agree that our long-term deficit is a major problem that we have to
fix. But the fact is that this recovery plan represents only a tiny
fraction of that long-term deficit. As I'll discuss in a moment, the
key to dealing with our long-term deficit and our national debt is
to get a handle on out-of-control health care costs -- not to stand
idly by as the economy goes into free fall.

So the recovery plan has
been the first step in confronting this economic crisis. The second
step has been to heal our financial system so that credit is once
again flowing to the businesses and families who rely on it.

The heart of this
financial crisis is that too many banks and other financial
institutions simply stopped lending money. In a climate of fear,
banks were unable to replace their losses from some of those bad
mortgages by raising new capital on their own, and they were
unwilling to lend the money they did have because they were afraid
that no one would pay it back. It's for this reason that the last
administration used what they called the Troubled Asset Relief
Program, or TARP, to provide these banks with temporary financial
assistance in order to get them lending again.

Now, I understand that
TARP is not popular, and I have to say that I don't agree with some
of the ways the TARP program was managed, but I do agree with the
broader rationale that we must provide banks with the capital and
the confidence necessary to start lending again. That's the purpose
of the stress tests that will soon tell us how much additional
capital will be needed to support lending at our largest banks.
Ideally, these needs will be met by private investors who are
willing to put in money to these banks. But where that's not
possible, and banks require substantial additional resources from
the government, then we will hold accountable those who are
responsible, we'll force the necessary adjustments, we'll provide
the support to clean up those bank balance sheets, and we will
assure the continuity of a strong and viable institution that can
serve our people and our economy.

Of course, there are
some who differ with our approach. On the one hand, there are some
who argue that the government should stand back and simply let these
banks fail -- especially since in many cases it was their bad
decisions that helped create the crisis in the first place. But
whether we like it or not, history has shown repeatedly that when
nations do not take early and aggressive action to get credit
flowing again, they have crises that last years and years instead of
months and months -- years of low growth, years of low job creation,
years of low investment, all of which cost these nations far more
than a course of bold, upfront action.

And although there are a
lot of Americans who understandably think that government money
would be better spent going directly to families and businesses
instead of to banks -- one of my most frequent questions in the
letters that I get from constituents is, "Where's my bailout?" --
and I understand the sentiment. It makes sense intuitively, and
morally it makes sense, but the truth is that a dollar of capital in
a bank can actually result in $8 or $10 of loans to families and
businesses. So that's a multiplier effect that can ultimately lead
to a faster pace of economic growth. That's why we have to fix the
banks.

Now, on the other hand,
there have been some who don't dispute that we need to shore up the
banking system, but they suggest that we've been too timid in how we
go about it. This is essentially the nationalization argument that
some of you may have heard. And the argument says that the federal
government should have already preemptively stepped in and taken
over major financial institutions the way that the FDIC currently
intervenes in smaller banks, and that our failure, my
administration's failure to do so is yet another example of
Washington coddling Wall Street -- "Why aren't you tougher on the
banks?"

So let me be clear: The
reason we have not taken this step has nothing to do with any
ideological or political judgment we've made about government
involvement in banks. It's certainly not because of any concern we
have for the management and shareholders whose actions helped to
cause this mess. Rather, it's because we believe that preemptive
government takeovers are likely to end up costing taxpayers even
more in the end, and because it's more likely to undermine than
create confidence.

Governments should
practice the same principle as doctors: First, do no harm. So rest
assured -- we will do whatever is necessary to get credit flowing
again, but we will do so in ways that minimize risks to taxpayers
and to the broader economy. To that end, in addition to the program
to provide capital to the banks, we've launched a plan that will
pair government resources with private investment in order to clear
away the old loans and securities -- the so-called toxic assets --
that are also preventing our banks from lending money.

Now, what we've also
learned during this crisis is that our banks aren't the only
institutions affected by these toxic assets that are clogging the
financial system. AIG, for example, is not a bank, it's an insurance
company, as I mentioned -- and yet because it chose to insure
billions of dollars worth of risky assets, essentially creating a
hedge fund on top of an insurance company, its failure could
threaten the entire financial system and freeze lending even more.
And that's why, as frustrating as it is -- and I promise you, nobody
is more frustrated than me with AIG -- I promise -- we
had to provide support for AIG, because the entire system, as
fragile as it is, could be profoundly endangered if AIG went into a
liquidation bankruptcy.

It's also why we need
new legal authority so that we have the power to intervene in such
financial institutions, the same way that bankruptcy courts
currently do with businesses that hit hard times but don't pose
systemic risks -- and that way we can restructure these businesses
in an orderly way that doesn't induce panic in the financial system
-- and, by the way, will allow us to restructure inappropriate bonus
contracts without creating a perception the government can just
change compensation rules on a whim.

This is also why we're
moving aggressively to unfreeze markets and jumpstart lending
outside the banking system, where more than half of all lending in
America actually takes place. To do this, we've started a program
that will increase guarantees for small business loans and unlock
the market for auto loans and student loans. And to stabilize the
housing market, we've launched a plan that will save up to four
million responsible homeowners from foreclosure and help many
millions more to refinance their homes.

In a few weeks, we will
also reassess the state of Chrysler and General Motors, two
companies with an important place in our history and a large
footprint in our economy -- but two companies that have also fallen
on hard times.

Late last year, the
companies were given transitional loans by the previous
administration to tide them over as they worked to develop viable
business plans. Unfortunately, the plans they developed fell short,
so we've given them some additional time to work these complex
issues through. And by the way, we owed that not to the executives
whose bad bets contributed to the weakening of their companies, but
to the hundreds of thousands of workers whose livelihoods hang in
the balance -- entire towns, entire communities, entire states are
profoundly impacted by what happens in the auto industry.

Now, it is our fervent
hope that in the coming weeks, Chrysler will find a viable partner
and GM will develop a business plan that will put it on a path to
profitability without endless support from American taxpayer. In the
meantime, we're taking steps to spur demand for American cars and
provide relief for autoworkers and their communities. And we will
continue to reaffirm this nation's commitment to a 21st-century
American auto industry that creates new jobs and builds the
fuel-efficient cars and trucks that will carry us toward a
clean-energy future.

Finally, to coordinate a
global response to this global recession, I went to the meeting of
the G20 nations in London the other week. Each nation has undertaken
significant stimulus to spur demand. All agreed to pursue tougher
regulatory reforms. We also agreed to triple the lending capacity of
the International Monetary Fund -- which, as many of you know, is an
international financial institution supported by all the major
economies -- so that they can provide direct assistance to
developing nations and vulnerable populations. That's not just
charity; because America's success depends on whether other nations
have the ability to buy what we sell, it's important that we pay
attention to these emerging markets.

We pledged to avoid the
trade barriers and protectionism that hurts us all in the end. And
we decided to meet again in the fall to gauge our progress and take
additional steps if necessary.

So that's where we've
been, that's what we've done in the last three months. All of these
actions -- the Recovery Act, the bank capitalization program, the
housing plan, the strengthening of the non-bank credit market, the
auto plan, and our work at the G20 -- all have been necessary pieces
of the recovery puzzle. They've been designed to increase aggregate
demand to get credit flowing again to families and businesses and to
help families and businesses ride out the storm. And taken together,
these actions are starting to generate signs of economic progress.

Because of our recovery
plan, schools and police departments have cancelled planned layoffs;
clean energy companies and construction companies are re-hiring
workers to build everything from energy-efficient windows to new
roads and highways. Our housing plan has helped lead to a spike in
the number of homeowners who are taking advantage of
historically-low mortgage rates by refinancing, which is like
putting a $2,000 tax cut in your pocket. Our program to support the
market for auto loans and student loans has started to unfreeze this
market and securitize more of this lending in the last few weeks.
And small businesses are seeing a jump in loan activity for the
first time in months.

Now, this is all welcome
and encouraging news. It does not mean the hard times are over; 2009
will continue to be a difficult year for America's economy, and
obviously, most difficult for those who've lost their jobs. The
severity of this recession will cause more job loss, more
foreclosures, and more pain before it ends. The market will continue
to rise and fall. Credit is still not flowing nearly as easily as it
should. The process for restructuring AIG and the auto companies
will involve difficult and sometimes unpopular choices; we are not
finished yet on that front. And all of this means that there's much
more work to be done. But all of this also means that you can
continue to expect an unrelenting, unyielding, day-by-day effort
from this administration to fight for economic recovery on all
fronts.

But even as we continue
to clear away the wreckage and address the immediate crisis, it is
my firm belief that our next task, beginning now, is to make sure
such a crisis never happens again. Even as we clean up
balance sheets and get credit flowing again, even as people start
spending and businesses start hiring -- all that's going to happen
-- we have to realize that we cannot go back to the bubble-and-bust
economy that led us to this point.

It is simply not
sustainable to have a 21st-century financial system that is governed
by 20th-century rules and regulations that allowed the recklessness
of a few to threaten the entire economy. It is not sustainable to
have an economy where in one year, 40 percent of our corporate
profits came from a financial sector that was based on inflated home
prices, maxed-out credit cards, over-leveraged banks and overvalued
assets. It's not sustainable to have an economy where the incomes of
the top 1 percent has skyrocketed while the typical working
household has seen their incomes decline by nearly $2,000. That's
just not a sustainable model for long-term prosperity.

For even as too many
were out there chasing ever-bigger bonuses and short-term profits
over the last decade, we continued to neglect the long-term threats
to our prosperity: the crushing burden that the rising cost of
health care is placing on families and businesses; the failure of
our education system to prepare our workers for a new age; the
progress that other nations are making on clean energy industries
and technologies while we -- we remain addicted to foreign oil; the
growing debt that we're passing on to our children. Even after we
emerge from the current recession, these challenges will still
represent major obstacles that stand in the way of our success in
the 21st century. So we've got a lot of work to do.

Now, there's a parable
at the end of the Sermon on the Mount that tells the story of two
men. The first built his house on a pile of sand, and it was soon
destroyed when a storm hit. But the second is known as the wise man,
for when "the rain descended, and the floods came, and the winds
blew, and beat upon that house, it fell not: for it was founded upon
a rock."

It was founded upon a
rock. We cannot rebuild this economy on the same pile of sand. We
must build our house upon a rock. We must lay a new foundation for
growth and prosperity -- a foundation that will move us from an era
of borrow and spend to one where we save and invest; where we
consume less at home and send more exports abroad.

It's a foundation built
upon five pillars that will grow our economy and make this new
century another American century: Number one, new rules for Wall
Street that will reward drive and innovation, not reckless
risk-taking; number two, new investments in education
that will make our workforce more skilled and competitive; number three, new investments in renewable energy and
technology that will create new jobs and new industries; number four, new investments in health care that will
cut costs for families and businesses; and number five, new savings
in our federal budget that will bring down the debt for future
generations.

That's the new
foundation we must build. That's our house built upon a rock. That
must be our future -- and my administration's policies are designed
to achieve that future.

Let me talk about each
of these steps in turn. The first step we will take to build this
foundation is to reform the outdated rules and regulations that
allowed this crisis to happen in the first place. It is time to lay
down tough new rules of the road for Wall Street to ensure that we
never find ourselves here again. Just as after the Great Depression
new rules were designed for banks to avoid the kind of reckless
speculation that helped to create the depression, so we've got to
make adaptations to our current set of rules: create rules that
punish shortcuts and abuse; rules that tie someone's pay to their
actual job performance --- a novel concept; rules that
protect typical American families when they buy a home, get a credit
card or invest in a 401(k). So we've already begun to work with
Congress to shape this comprehensive new regulatory framework -- and
I expect a bill to arrive on my desk for my signature before the
year is out.

The second pillar of
this new foundation is an education system that finally prepares our
workers for a 21st century economy. You know, in the 20th century,
the G.I. Bill helped send a generation to college. For decades we
led the world in educational attainment, and as a consequence we led
the world in economic growth. But in this new economy, we've come to
trail the world's leaders in graduation rates, in educational
achievement, in the production of scientists and engineers. That's
why we have set a goal that will greatly enhance our ability to
compete for the high-wage, high-tech jobs of the 21st century: By
2020, America will once again have the highest proportion of college
graduates in the world. That is the goal that we have set and we
intend to do.

To meet that goal, we
have to start early. So we've already dramatically expanded early
childhood education. We are investing in innovative
programs that have proven to help schools meet high standards and
close achievement gaps. We're creating new rewards that tie
teachers' performance and new pathways for advancement. And I've
asked every American to commit to at least one year or more of
higher education or career training, and we have provided tax
credits to make a college education more affordable for every
American, even those who attend Georgetown.

And, by the way, one of
the changes that I would like to see -- and I'm going to be talking
about this in weeks to come -- is once again seeing our best and our
brightest commit themselves to making things -- engineers,
scientists, innovators. For so long, we have placed at
the top of our pinnacle folks who can manipulate numbers and engage
in complex financial calculations. And that's good, we need some of
that. But you know what we can really use is some more
scientists and some more engineers, who are building and making
things that we can export to other countries.

Now, the third pillar of
this new foundation is to harness the renewable energy that can
create millions of new jobs and new industries. We all know that the
country that harnesses this new energy source will lead the 21st
century. Yet we've allowed other countries to outpace us on this
race to the future. I don't know about you, but I do not accept a
future where the jobs and industries of tomorrow take root beyond
our borders. I think it's time for America to lead again.

So the investments we
made in the Recovery Act will double this nation's supply of
renewable energy in the next three years. And we are
putting Americans to work making our homes and buildings more
efficient so that we can save billions on our energy bills and grow
our economy at the same time.

Now, the only though
that we can truly spark the transformation that's need is through a
gradual, market-based cap on carbon pollution, so that clean energy
is the profitable kind of energy.

There are those who've
argued that we shouldn't attempt, we shouldn't even be thinking, we
shouldn't even be talking about such a transition until the economy
recovers. And they are right that we have to take into account the
costs of transition. Transitioning to a clean energy economy will
not be easy. But we can no longer delay putting a framework for a
clean energy economy in place. That needs to be done now.

If businesses and
entrepreneurs know today that we are closing this carbon pollution
loophole, they'll start investing in clean energy now. And pretty
soon, we'll see more companies constructing solar panels, and
workers building wind turbines, and car companies manufacturing
fuel-efficient cars. Investors will put some money into a new energy
technology, and a small business will open to start selling it.
That's how we can grow this economy, enhance our security, and
protect our planet at the same time.

Now, the fourth pillar
of our new foundation is a 21st century health care system where
families, businesses and government budgets aren't dragged down by
skyrocketing insurance premiums. One and a half million
Americans could lose their homes this year just because of a medical
crisis. Major American corporations are struggling to compete with
their foreign counterparts. Small businesses are closing their
doors. We can't allow the cost of health care to continue strangling
our economy.

And that's why our
Recovery Act will invest in electronic health records with strict
privacy standards that can save money and lives and reduce medical
error. That's why we've made the largest investment ever in
preventive care, because that's one of the best ways to keep costs
under control. And included in the budgets that just passed Congress
is an historic commitment to reform that will finally make quality
health care affordable for every American. So I'm
looking forward in the next few months to working with both parties
in Congress to make this reform a reality. We can get this done --
and we have to get it done.

Now, fixing our health
care system will -- will require resources; it's not going to be
free. But in my budget we've made a commitment to fully pay for
reform without increasing the deficit, and we've identified specific
savings that will make the health care system more efficient and
reduce costs for us all.

In fact, we've
undertaken an unprecedented effort to find this kind of savings in
every corner of the budget, because the final pillar in building our
new foundation is restoring fiscal discipline once this economy
recovers.

Already we've identified
$2 trillion dollars in deficit reductions over the next decade. We
need to do more, but we've already done that. We've announced
procurement reform that will greatly reduce no-bid contracts and
save the government $40 billion. We need to do more, but that's an
important start. Secretary Gates recently announced a courageous set
of reforms that go right at the hundreds of billions of dollars in
waste and cost overruns that have bloated our defense budget without
making America safer. We need to do more, but that proposal by
Secretary Gates is right on target. We will end education programs
that don't work, we will root out waste and fraud and abuse in our
Medicare program.

Altogether, this budget
will reduce discretionary spending for domestic programs as a share
of the economy by more than 10 percent over the next decade to the
lowest level we've seen since we began keeping records nearly half a
century ago. And as we continue to go through the federal budget
line by line, we will be announcing additional savings, secured by
eliminating and consolidating programs that we don't need so we can
make room for the things that we do need.

That's what we're doing
now. Of course, I realize that for some, this isn't enough. I know
there's a criticism out there that my administration has been
spending with reckless abandon, pushing a liberal social agenda
while mortgaging our children's future. You've heard the argument.

Well, let me make three
points. First, as I said earlier, the worst thing that we could do
in a recession this severe is to try to cut government spending at
the same time as families and businesses around the world are
cutting back on their spending. So as serious as our deficit and
debt problems are -- and they are very serious -- major efforts to
deal with them have to focus on the medium and long-term budget
picture, not on the short-term. And that's exactly what we've done.

Second, in tackling the
deficit issue, we simply cannot sacrifice the long-term investments
that we so desperately need to generate long-term prosperity. That's
the argument that some critics have made: Well, you're proposing
health care reform, you shouldn't be doing that; you're proposing
education investments, you shouldn't be doing that, that adds to the
deficit.

Look, just as a
cash-strapped family may cut back on all kinds of luxuries, but will
still insist on spending money to get their children through
college, will refuse to have their kids drop out of college and go
to work in some fast-food place, even though that might bring in
some income in the short-term, because they're thinking about the
long term -- so we as a country have to make current choices with an
eye for the future.

If we don't invest now
in renewable energy, if we don't invest now in a skilled workforce,
if we don't invest now in a more affordable health care system, this
economy simply won't grow at the pace it needs to in two or five or
10 years down the road. If we don't lay this new foundation now, it
won't be long before we're right back where we are today. And I can
assure you that chronically slow growth will not help our long-term
budget situation. That's the second point.

Third point, the problem
with our deficit and debt is not new. It has been building
dramatically over the past eight years, largely because big tax cuts
combined with increased spending on two wars and the increased costs
of government health care programs have pushed it ever upwards. This
structural gap in our budget, between the amount of money that's
coming in and the amount of money that's going out, will only get
worse as the baby boomers age, and will in fact lead us down an
unsustainable path.

But let's not kid
ourselves and suggest that we can solve this problem by trimming a
few earmarks or cutting the budget for the National Endowment for
the Arts. That's just not true. Along with defense and
interest on the national debt, the biggest cost drivers in our
budget are entitlement programs like Medicare, Medicaid, and Social
Security -- all of which get more and more expensive every year. So
if we want to get serious about fiscal discipline, and I do, then
we're going to not only have to trim waste out of our discretionary
budget -- which we've already begun -- we will also have to get
serious about entitlement reform.

Now, nothing will be
more important to this goal than passing health care reform that
brings down costs across the system, including in Medicare and
Medicaid. So make no mistake, health care reform is
entitlement reform. That's not just my opinion -- that was the
conclusion of a wide range of participants at the Fiscal
Responsibility Summit that we held at the White House in February.
And that's one of the reasons why I firmly believe we need to get
health care reform done this year.

Once we tackle rising
health care costs, we must also work to put Social Security on
firmer footing. It's time for both parties to come together and find
a way to keep the promise of a sound retirement for future
generations. And we should restore a sense of fairness and balance
to our tax code including by shutting down corporate loopholes and
ensuring that everyone pays what they owe.

All of these efforts
will require tough choices. All these efforts will require
compromise. But the difficulties can't serve as an excuse for
inaction -- not anymore -- which brings me to one final point I'd
like to make today. I've talked a lot about the fundamental weakness
in our economy that led us to this day of reckoning. But we also
arrived here because of a fundamental weakness in our political
system.

For too long, too many
in Washington put off hard decisions for some other time on some
other day. There's been a tendency to spend a lot of time scoring
political points instead of rolling up sleeves to solve real
problems.

There's also an
impatience that characterizes this town -- an attention span that
has only grown shorter with the 24-hour news cycle that insists on
instant gratification in the form of immediate results or higher
poll numbers. When a crisis hits, there's all too often a lurch from
shock to trance, with everyone responding to the tempest of the
moment until the furor has died down, the media coverage has moved
on to something else, instead of confronting the major challenges
that will shape our future in a sustained and focused way.

This can't be one of
those times. The challenges are too great. The stakes are too high.
I know how difficult it is for members of Congress in both parties
to grapple with some of the big decisions we face right now. I'd
love if these problems were coming at us one at a time instead of
five or six at a time. It's more than most Congresses and most
Presidents have to deal with in a lifetime.

But we have been called
to govern in extraordinary times. And that requires an extraordinary
sense of responsibility -- to ourselves, to the men and women who
sent us here, to the many generations whose lives will be affected
for good or for ill because of what we do here.

There is no doubt that
times are still tough. By no means are we out of the woods just yet.
But from where we stand, for the very first time, we're beginning to
see glimmers of hope. And beyond that, way off in the distance, we
can see a vision of an America's future that is far different than
our troubled economic past. It's an America teeming with new
industry and commerce, humming with new energy and discoveries that
light the world once more -- a place where anyone from anywhere with
a good idea or the will to work can live the dream they've heard so
much about.

That is the house upon
the rock -- proud, sturdy, unwavering in the face of the greatest
storms. And we will not finish it in one year. We will not finish it
in many. But if we use this moment to lay that new foundation, if we
come together and begin the hard work of rebuilding, if we persist
and persevere against the disappointments and setbacks that will
surely lie ahead, then I have no doubt that this house will stand
and the dream of our founders will live on in our time.